PPL Exceeds Second-Quarter Consensus Estimate for Core Earnings, Reaffirms $3.30 to $3.50 Per Share Earnings Forecast from Core Operations
PRNewswire-FirstCall
ALLENTOWN, Pa.

Due to two unusual charges, PPL Corporation (NYSE: PPL) today reported a loss per share of $0.18 for the second quarter of 2002. The charges, primarily non-cash in nature, relate to CEMAR, PPL's Brazilian distribution company ($94 million or $0.64 per share), and to expenses incurred with regard to the seven percent reduction in the company's workforce announced last month ($74 million or $0.29 per share).

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PPL reported second-quarter earnings from its core business operations of $0.75 per share, exceeding Thomson Financial's First Call consensus earnings estimate of $0.60 per share from core operations. PPL reported record second- quarter earnings of $0.80 per share from core operations a year ago.

This performance keeps PPL on track to achieve its 2002 earnings forecast of between $3.30 and $3.50 per share from core operations. In addition, PPL reaffirmed its projection, announced earlier this year, for mid-single-digit growth in earnings per share from core operations for 2003.

Second-quarter earnings per share from core operations were $0.05 lower than last year, primarily due to lower margins on energy sales in the western United States. The positive drivers for second-quarter core earnings were increased margins on energy transactions in the eastern United States and success in continuing to reduce operating costs.

"The continued relatively strong performance of PPL's earnings from core operations has demonstrated the value of our hedging strategy," said William F. Hecht, PPL's chairman, president and chief executive officer. "There continue to be many unanswered questions regarding the structure of our industry, and this has reinforced our belief in the value of multi-year sales contracts to reduce unpredictability in earnings, to reduce risk and to improve returns."

PPL's integrated corporate strategy encompasses generating and selling energy in key U.S. markets through an optimum balance of energy supply and customer load under multi-year contracts and operating high-quality energy delivery businesses in select regions. "Our solid performance in core operations in the second quarter and our reaffirmation of PPL's growth rate validate our strategy," Hecht said. "Our plans also call for maintaining a strong liquidity and credit-quality position to give us the flexibility to respond to changing business conditions, while serving as a platform to pursue disciplined growth opportunities," said Hecht.

About 82 percent of PPL's earnings from core operations in 2002 are expected to come from electricity generation that is dedicated to supplying energy under long-term contracts, from its regulated energy delivery business in Pennsylvania and from short-term energy sales in the first half of 2002.

By the end of this month, the company expects to place more than 1,000 megawatts of electricity generating capacity into commercial operation in new generating facilities in Illinois, Arizona and New York. Hecht said, "The new plants are uniquely positioned to serve the growing demands of the Chicago, Phoenix and Long Island metropolitan areas, where power imports are restricted because of transmission congestion."

PPL reported a loss of $0.20 per share for the first half of 2002, due primarily to several unusual charges. The company recorded a first-quarter charge of $1.02 per share related to changes in accounting rules for goodwill that affect its Latin American investments. Also affecting PPL's earnings for the first half of 2002 were the second-quarter charges associated with its Brazilian investment and its workforce reduction program.

Earnings from PPL's core operations in the first half of 2002 were $1.77 per share compared to $2.31 per share for the first half of 2001. While reflecting the lower margins on energy sales in the western United States from a year ago, this year-to-date performance keeps PPL on track to achieve its forecast for core earnings per share for 2002. The positive drivers of PPL's core earnings for the first half of 2002 were: increased margins on energy transactions in the eastern United States, improved earnings contributions from energy-related businesses such as PPL's synthetic fuel operations, and success in continuing to reduce operating costs.

For the 12 months ended June 30, 2002, PPL reported a loss of $1.29 per share due to impairment charges on PPL's Latin American and United Kingdom electricity delivery businesses, changes in accounting rules for goodwill that affect its Latin American investments, the decision to cancel several domestic power plant projects, staffing cuts associated with its workforce reduction program, and charges associated with the bankruptcy of Enron. These charges were partially offset by a credit to earnings relating to a change in pension accounting. PPL's 12-month earnings from core operations were $3.68 per share compared to $4.00 per share for the same period of 2001.

In late January 2002, PPL announced that it had taken an impairment charge of $217 million, for December 2001, with respect to CEMAR and also said it would provide no additional funding for CEMAR. That impairment charge represented the net asset value of CEMAR at the end of 2001.

In the first quarter of 2002, PPL recorded a $6 million pre-tax charge for an early-January investment made prior to its decision to invest no additional funds in CEMAR. In the second quarter of 2002, PPL recorded a charge for the balance of its exposure to CEMAR of about $94 million, an amount that was previously reported and that is primarily related to the cumulative translation adjustment (CTA). The CTA is the amount of currency devaluation of PPL's original investment in CEMAR since the date of purchase. That balance could not be written off previously because of applicable accounting rules.

On Monday, July 22, PPL announced a proposal to sell CEMAR to Franklin Park Energy LLC of McLean, Va. To expedite the transaction, CEMAR has requested that the Brazilian regulator act by mid-August on the sale proposal. If the transaction is approved, Franklin Park would purchase CEMAR for a nominal price and would assume the responsibility to operate CEMAR.

The proposed sale of CEMAR to Franklin Park does not affect PPL's earnings forecast. PPL has reiterated that any operating losses for CEMAR in 2002 would be offset accordingly upon exiting the investment in CEMAR.

PPL Corporation, headquartered in Allentown, Pa., controls or owns more than 10,000 megawatts of generating capacity in the United States, sells energy in key U.S. markets, and delivers electricity to nearly 6 million customers in Pennsylvania, the United Kingdom and Latin America.

(Note: All references to earnings per share in the text of this news release are stated in terms of diluted earnings per share.)

                 PPL CORPORATION AND SUBSIDIARY COMPANIES
              CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)

                        Consolidated Balance Sheet
                          (Millions of Dollars)

                                           June 30, 2002  Dec. 31, 2001 (a)
  Assets
  Current assets                               $1,777          $2,338
  Investments                                   1,065             999
  Property, plant and equipment -- net
    Transmission and distribution               2,677           2,566
    Generation                                  2,521           2,464
    General and intangible                        311             310
    Construction work in progress                 315             181
    Nuclear fuel and other leased property        116             127
    Electric utility plant                      5,940           5,648
    Gas and oil utility plant                     199             196
    Other property                                109             103
                                                6,248           5,947
  Recoverable transition costs                  2,069           2,172
  Regulatory and other assets                   1,111           1,118
  Total assets                                $12,270         $12,574

  Liabilities and Equity
  Current liabilities                          $1,856          $1,838
  Long-term debt (less current portion)         4,882           5,081
  Deferred income taxes and ITC                 1,500           1,449
  Liability for above market NUG purchases        390             493
  Other noncurrent liabilities                    927             911
  Minority interest                                38              38
  Company-obligated mandatorily redeemable
   securities                                     725             825
  Preferred stock                                  82              82
  Earnings reinvested                             887           1,023
  Other common equity                           1,819           1,670
  Treasury stock                                 (836)           (836)
    Total liabilities and equity              $12,270         $12,574

  (a) Certain amounts have been reclassified to conform to the current year
      presentation.


                      Consolidated Income Statement
                          (Millions of Dollars)

                          3 Months Ended June 30    6 Months Ended June 30
                             2002        2001(a)        2002       2001(a)

  Operating Revenues
    Utility                   $741        $695        $1,547       $1,522
    Unregulated retail
     electric and gas           42         104            91          243
    Wholesale energy marketing
     and trading               353         431           620          889
    Energy-related
     businesses                165         181           318          323
                             1,301       1,411         2,576        2,977

  Operating Expenses
    Fuel and purchased power   471         554           876        1,137
    Other operation and
     maintenance               268         286           521          524
    Amortization of
     recoverable transition
     costs                      50          55           103          126
    Depreciation                64          67           126          133
    Energy-related businesses  146         162           272          275
    Taxes, other than income    47          39            98           80
    Other charges
     Write-down of
      international energy
      projects                  94           0           100            0
     Cancellation of generation
      projects                   0           0             0            0
     Workforce reduction        74           0            74            0
                             1,214       1,163         2,170        2,275

  Operating income              87         248           406          702
  Other income - net             7           6            12           12
  Interest expense             100          88           197          192
  Income (loss) before
   income taxes and
   minority interest            (6)        166           221          522
  Income taxes                   4          35            66          161
  Minority interest              2           1             3            3
  Income (loss) before
   extraordinary items         (12)        130           152          358
  Extraordinary item
   (net of tax)                  0           0             0            0
  Income (loss) before
   cumulative effect of a
   change in accounting
   principles                  (12)        130           152          358
  Cumulative effect of a
   change in accounting
   principles (net of tax)       0           0          (150)           0
  Income (loss) before
   dividends on preferred
   securities                  (12)        130             2          358
  Dividends - preferred
   securities                   15          13            32           19
  Net Income (loss)           ($27)       $117          ($30)        $339

  Earnings per share of
   common stock - basic
    Income from core
     operations              $0.75       $0.80         $1.78        $2.33
    Unusual items            (0.93)       0.00         (1.98)        0.00
    Net Income (loss)       ($0.18)      $0.80        ($0.20)       $2.33

  Earnings per share of
   common stock - diluted
    Income from core
     operations              $0.75       $0.80         $1.77        $2.31
    Unusual items            (0.93)       0.00         (1.97)        0.00
    Net Income (loss)       ($0.18)      $0.80        ($0.20)       $2.31

  Average shares
   outstanding (thousands)
    Basic                  147,149     145,901       146,927      145,608
    Diluted                147,508     146,700       147,275      146,471


                                                   12 Months Ended June 30
                                                    2002           2001(a)
  Operating Revenues
    Utility                                         $3,059         $2,856
    Unregulated retail electric and gas                204            521
    Wholesale energy marketing and trading           1,410          2,015
    Energy-related businesses                          651            558
                                                     5,324          5,950
  Operating Expenses
    Fuel and purchased power                         1,867          2,397
    Other operation and maintenance                  1,021          1,051
    Amortization of recoverable transition costs       228            244
    Depreciation                                       247            256
    Energy-related businesses                          569            497
    Taxes, other than income                           173            162
    Other charges
     Write-down of international energy projects       436              0
     Cancellation of generation projects               150              0
     Workforce reduction                                74              0
                                                     4,765          4,607
  Operating income                                     559          1,343
  Other income - net                                    12            (10)
  Interest expense                                     392            388
  Income (loss) before income taxes and
   minority interest                                   179            945
  Income taxes                                         166            315
  Minority interest                                     (2)             6
  Income (loss) before extraordinary items              15            624
  Extraordinary item (net of tax)                        0             11
  Income (loss) before cumulative effect of a
   change in accounting principles                      15            635
  Cumulative effect of a change in accounting
   principles (net of tax)                            (140)             0
  Income (loss) before dividends on preferred
   securities                                         (125)           635
  Dividends - preferred securities                      65             32
  Net Income (loss)                                  ($190)          $603

  Earnings per share of common stock - basic
    Income from core operations                      $3.69          $4.02
    Unusual items                                    (4.99)          0.13
    Net Income (loss)                               ($1.30)         $4.15

  Earnings per share of common stock - diluted
    Income from core operations                      $3.68          $4.00
    Unusual items                                    (4.97)          0.13
    Net Income (loss)                               ($1.29)         $4.13

  Average shares outstanding (thousands)
    Basic                                          146,642        145,187
    Diluted                                        147,025        145,977

  (a) Certain amounts have been reclassified to conform to the current year
      presentation.


                              Key Indicators

  Financial
                                         12 Months Ended   12 Months Ended
                                          June 30, 2002    June 30, 2001

  Dividends declared per share                $1.25             $1.06
  Book value per share (a)                   $12.71            $15.42
  Market price per share (a)                 $33.08            $55.00
  Dividend yield (a)                           3.8%              1.9%
  Dividend payout ratio - diluted (b)           34%               27%
  Price/earnings ratio - diluted (a) (b)        9.0              13.8
  Return on average common equity (b)        23.02%            30.26%

  (a) End of period
  (b) Based on earnings from core operations


  Operating - Domestic Electricity Sales

                       3 Months Ended June 30     6 Months Ended June 30
  PPL Corp.
  (millions of kwh)                    Percent                     Percent
                      2002      2001    Change   2002      2001     Change
  Retail
    Delivered (a)    8,269      8,082    2.3%   17,372    17,963    -3.3%
    Supplied         8,687      8,928   -2.7%   18,315    19,481    -6.0%

  Wholesale
    East             5,288      4,259   24.2%    9,907     9,503     4.3%
    West
     Northwestern
      Energy/Montana
      Power (b)      1,200      1,048   14.5%    2,566     2,247    14.2%
    Other            1,811        743  143.7%    3,475     1,769    96.4%


                                     12 Months Ended June 30
  PPL Corp.
  (millions of kwh)                                          Percent
                                2002            2001         Change
  Retail
    Delivered (a)              34,018          34,567        -1.6%
    Supplied                   36,229          38,192        -5.1%

  Wholesale
    East                       19,528          23,305       -16.2%
    West
     Northwestern Energy/
     Montana Power (b)          5,036           4,757         5.9%
    Other                       5,547           3,760        47.5%

  (a) Electricity delivered to retail customers represents the kwh delivered
      to customers within PPL Electric Utilities Corp.'s service territory.
  (b) Northwestern Energy purchased Montana Power's electric delivery
      business in February 2002.  PPL Montana's power agreement with Montana
      Power expired June 30, 2002.  PPL EnergyPlus, on behalf of PPL
      Montana, began selling energy to Northwestern Energy on July 1, 2002.

Certain statements contained in this news release, including statements with respect to future earnings, energy marketing, prices and delivery, corporate strategy, subsidiary performance, business disposition, growth, project development, accounting impacts, liquidity, and generating capacity, are "forward-looking statements" within the meaning of the federal securities laws. Although PPL Corporation believes that the expectations and assumptions reflected in these forward-looking statements are reasonable, these statements involve a number of risks and uncertainties, and actual results may differ materially from the results discussed in the statements. The following are among the important factors that could cause actual results to differ materially from the forward-looking statements: market demand and prices for energy, capacity and fuel; weather variations affecting customer energy usage; competition in retail and wholesale power markets; the effect of any business or industry restructuring; the profitability and liquidity of PPL Corporation and its subsidiaries; new accounting requirements or new interpretations or applications of existing requirements; operating performance of plants and other facilities; environmental conditions and requirements; system conditions and operating costs; development of new projects, markets and technologies; performance of new ventures; political, regulatory or economic conditions in countries where PPL Corporation or its subsidiaries conduct business; receipt of necessary governmental approvals; capital market conditions; stock price performance; foreign exchange rates; and the commitments and liabilities of PPL Corporation and its subsidiaries. Any such forward-looking statements should be considered in light of such factors and in conjunction with PPL Corporation's Form 10-K and other reports on file with the Securities and Exchange Commission.

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SOURCE: PPL Corporation

CONTACT: For media, Dan McCarthy, +1-610-774-5758, or for financial
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